In the past two or three decades celebrity advertising/endorsement has become common practice amongst brands that wish to create and maintain attention, as well as increase product or brand recall rates (Erdogan, 1999). However, the juxtaposition of brands and organisations with admirable figures that possess qualities such as likeability, attractiveness, trustworthiness and credibility is not a new phenomenon (Erdogan, 1999). It is believed that an eighteenth century potter named Josia Wedgewood was the pioneer of using celebrities to his advantage when Queen Charlotte began using his products, after which he began referring to himself as “potter to Her Majesty” (Seno & Lukas, 2007). Since then the use of public figures to sell products has assumed a more corporate structure with contracts in place to guide the process, governing compensation, the celebrity’s level of involvement in the product and termination rights and procedures. In this paper, the literature overview of celebrities and celebrity endorsement will be presented, as well as the historical development of celebrity endorsement. Its effectiveness on investments and consumers in developing countries will be critically discussed, as well as the benefits and risks of celebrity endorsement. The deal between Nike and Tiger Woods will also be critically discussed and applied as an example of the effects of celebrity endorsement, as well as the effects of negative publicity.
2. Historical Development
The cigarette industry was the first to formally use a celebrity to endorse a product in 1905 when Murad Cigarettes used comedians Fatty Arbuckle and Harry Bulger (Clark & Horstmann, 2005). The growth of commercial radio in the 1930s and commercial television in the 1950s is credited with the early development of celebrity endorsement (Erdogan, 1999). In those days the supply of celebrities was very limited and they only used their status as ‘brand presenters’ because of a fear of their image being clouded by endorsements (Erdogan, 1999). In the late 1970s celebrities became more open to the idea of endorsements which allowed for greater choice for corporations. By 1979 it was estimated that 1 in every 6 (17%) advertisements made use of a celebrity to endorse a product, and by 1988 it was 1 in every 5 i.e. 20% (Erdogan, 1999). Khatri (2006) estimates that in 1998 alone, American companies spent $800 million on acquiring celebrities to be used in advertising, promotion and public relations campaigns. In 2006, Ding, Molchanov, and Stork (2011) put the estimation between 2 to 3 billion dollars.
Since the early 1990s the use of celebrities has grown, ranging from actors/actresses, musicians and athletes, to politicians and even fictional characters (Khatri, 2006). It has become a global strategy with countries such as Japan who have celebrities featuring on 70% of their commercials, most of which are Japanese (Hsu & McDonald, 2002). China has also made large investments in celebrity endorsements, athletes especially (Schaefer, Parker, & Kent, 2010).
In the 21st century some corporations have opted to use average people or clips of real events to endorse their products such as Unilever’s Dove commercials with real women rather than models (Biswas, Hassain, & O’Donnell, 2009). This type of strategy has the potential to be more compelling as consumers find that they relate more to the average person (Biswas et al., 2009). Celebrities seem to be a big risk since their lifestyles often lead to unfavourable acts that threaten the image of the endorsed brand. Despite this, using celebrities to endorse products has proven to be beneficial in most cases with athletes proving to be the most favoured endorsers (Elberse & Verleun, 2011).
3. Celebrities and celebrity endorsement: literature overview
3.1 A celebrity
McCraken (1989) defines celebrities as people who receive and enjoy large amounts of...